Could convertibles come back into fashion?

Kira Nickerson discovers that some fund managers are beginning to re-examine this previously unpopular asset class.

Fund managers are finally beginning to take notice of convertibles as their superior yields have recently driven decent returns. The UBS Europe (Convertibles) index returned 18.4% in 2012, 19.5% over three years and 20% over five years, according to the convertibles team at Mirabaud Asset Management. The average daily volatility for this five-year period on the UBS CB Index was 8.7%, compared to 28.7% for equity volatility (using the Eurostoxx50 index). But the asset class has traditionally been overlooked because, in the UK at least, convertibles have not been a popular route for ...